Nine will acquire all of Fairfax’s shares and take a controlling 51.1% share in the new business, which will be called NEC.
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Nine Entertainment has announced a takeover of Fairfax Media in a surprise deal worth an estimated $4bn.

The merger, which the television network claims will create Australia’s largest integrated media player, was announced to the stock market on Thursday.

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Nine will take a controlling 51.1% share in the new business with Fairfax taking the rest. The combined entity will take the name of Nine’s parent company, Nine Entertainment Co, or NEC.

Hugh Marks of Nine will be the new chief executive and Peter Costello, the Nine chairman, will now lead the board of the new business.

Under the terms of the proposed transaction, Fairfax shareholders will receive 0.3627 Nine shares for each Fairfax share held and $0.025 cash. It represents a 21.9% premium to Fairfax’s closing share price of 77c on Wednesday.

It will also “review the scope and breadth” the newly merged business with job losses expected at Fairfax in backroom roles such as finance and human resources.

Although Marks said on Thursday that the main motivation was to get hold of Fairfax’s TV streaming asset Stan and its property business Domain, Nine said there were no plans to close the newspapers.

On a call to investors and business analysts, Marks said news was an important part of both Nine and Fairfax and the two newsrooms would now have multiple platforms to distribute their content on.

Fairfax’s chief executive, Greg Hywood, who will remain for about six months but will then depart the business entirely, said on the same briefing that Nine has a “great history of journalism” and he believed the television company was “a great home for the mastheads”.

Marks gave a media conference in Sydney on Thursday morning to talk about the deal which came after Nine approached Fairfax at the beginning of July.

When trading in Fairfax shares restarted on Thursday morning they jumped 13%. Shares in NEC were down 6.5%.

“This morning we announced that Nine and Fairfax Media would merge, resulting in one of Australia’s leading independent media companies,” he said. “The merged company will be called Nine.”

Costello said: “Both Nine and Fairfax have played an important role in shaping the Australian media landscape over many years. The combination of our businesses and our people best positions us to deliver new opportunities and innovations for our shareholders, staff, and all Australians in the years ahead.”

In the joint statement to the ASX, it was also revealed that once the process was finished Nine will “review the scope and breadth of the combined business, to align with its strategic objectives and its digital future”.

Pending approval from regulators and Fairfax shareholders, the takeover was expected to be completed before the end of the year.

“The ground-breaking merger – harnessing the strength, assets, quality and reach of two of the country’s most famous industry brands – is another highly significant step in the evolution of Nine’s business into one of the most powerful media organisations in the country. The scope of this deal is genuinely quite breathtaking.

“In addition to our existing television and digital businesses, the new NEC will also become the proprietor of the iconic Fairfax mastheads as well as the new majority owner of Domain (60%) and the Macquarie Radio Network (54.5%). And through the transaction Nine will also move to 100% ownership of Stan …

“This merger is not about cost reductions. This merger is all about creating a business with the diversity and scale of revenues and earnings to be able to continue to do what we are all about. Create great content. Distribute it broadly. And engage our audiences and advertisers …